The Centre had committed Rs 48,000 crore for the mission but only Rs 41,544 crore was allocated till the end of the last financial year.
The Narendra Modi government launched the Smart Cities Mission (SCM) in June 2015 to create 100 smart cities that provide “core infrastructure” and a “decent quality of life” to citizens. Other features of smart cities were listed as “sustainable environment and application of the smart solution”.
The project, which was supposed to be completed by 2020 but was extended by two years due to the pandemic, has been given another extension till 2023.
Delhi-based think tank Centre for Financial Accountability analysed and studied the project and recently published a report. Newsclick spoke with Gaurav Dwivedi and Kenneth Gomes, who worked extensively to produce the report.
What was the key idea behind the Smart Cities Mission?
Gaurav Dwivedi: The mission is part of the larger process of reforms in urban areas that started post-90s. In the early 2000s, the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), a set of pre-set format reforms for urban local bodies, was launched. Though the 74th Constitutional Amendment Act, 1992, established a mandate for decentralising powers to urban local bodies, decentralisation is not complete—for example, they lack financial power.
SCM, which is a continuance of the reforms, includes the implementation of public-private partnerships (PPP) in public services, like transport, water supply sanitation, street lights and many other things. Under JNNURM, special-purpose vehicles (SPVs) which were separate from the municipal bodies managed such public services.
SCM has taken it a step further with an SPV, a limited liability company, handling the entire planning, design, execution and financing of public service projects in every city. Therefore, the mission continues the earlier reform process by implementing market principles and privatisation reduces the government’s role in providing public services.
It has been seven years since the mission was launched. Where does it stand today? What does your analysis of the project show?
Gaurav: This mission was launched in phases—20 cities were selected in round one, another 20 in round two, followed by a fast-track round. By 2017, all 100 cities were selected. Meanwhile, the pandemic struck in 2020 and the project was disrupted.
We had a lot of hope from the mission because of the technology-based programme and its high-profile nature. But after seven years, the data we collected is not encouraging in terms of project implementation, budget utilisation and the performance of cities.
Apparently, most powers of urban local bodies have shifted from municipal corporations to smart city companies, which are making a majority of policy decisions in terms of project implementation, who benefits, where the money comes from, who’s being charged and who pays for it. They work on the PPP model. Though some public officials are on the boards of these firms, the government faces more risks and the companies earn profit since they function in limited liability mode.
Besides, the CEOs of these companies directly report to the ministry of urban development. Therefore, the process is becoming more centralised instead of getting decentralised. The Centre directly controls and dictates what happens at the urban municipality level.
It also means that the powers of municipal corporations and councillors have been reduced. The decision-making powers of municipal corporation assemblies and their debates and discussions on public welfare issues at every ward and mohalla are actually declining.
The mission proposed to set up a citizen advisory forum, a sort of parallel kind of forum in municipal corporations. But we found that very few cities have such citizen advisory forms, which are not inclusive at all—they lack the wider representation that different sections of society deserve. Therefore, urban local bodies are being controlled and have a very selective representation.
Kenneth Gomes: The data revealed that only 51.4% of the project has been completed. Utilisation of funds released to the SPVs is between 30%-35%. The Centre had committed Rs 48,000 crore for these 100 cities, meaning every city received Rs 488 crore on average. However, a review of the data shows that Rs 41,544 crore was allocated till the end of the last financial year. What is worse is that the actual expenditure till 2022 comes down to Rs 28,326 crore—a huge deviation of 40.9%.
Another noticeable point is that when the project’s deadline was extended citing COVID-19 as the reason, the 2021 demands for grant reports pointed out that there was a huge difference between actual and revised estimates even in the 2019-20 financial year.
The situation is worse when the cities are compared with Varanasi utilising more than 80% of the funds while others not even 10%.
Who are the other stakeholders of the project?
Gaurav: Since this is primarily a tech-driven project, technology companies like IBM, Cisco, Siemens, Phillips, among others are driving this ‘smart kind of concept’. Besides, there are construction companies interested in building infrastructure, like flyovers. Of course, states and the Centre have a huge stake because it’s their baby. At the local level, a lot of private companies are a big part of the mission.
Every smart city proposal was prepared by consultants. For example, in Bhopal, TCS prepared the proposal and was paid in crores. Besides, there are different companies for road networks, solid waste management, etc.
But public representation is missing. There is no consultation or debate. It is a corporate-driven project.
Your report cites many loopholes and issues in the project. Could you list the top three?
Gaurav: The first is the straitjacket approach. One cannot have NDMC and Bhagalpur on the same platform. Small-town local bodies don’t have the kind of budget and resources of NDMC or BMC. Therefore, the results are going to be different. This is a very flawed approach.
Second, money alone cannot sustain the project without building a capable system. It is designed to fail.
Third, the Centre should have played a more proactive role in supporting small corporations by bringing in more money. People and even political parties lack sufficient representation.
Kenneth: Another issue is all this instant infrastructure will need maintenance; it’s not clear who will maintain it. A big loophole in the mission is not addressing the concerns post-implementation. There is not enough clarity on the smart cities companies after the project’s completion. Besides, it seems that the public was not consulted properly about the kind of infrastructure it needs. Ultimately, people will pay for the maintenance of the infrastructure.
What should have been the process to implement the mission?
Gaurav: Primarily, the government should have discussed the project with local communities—for example, what is their priority and what is going to benefit them? It can range from a very small water supply project to a light project. Building high towers cannot be the priority of each city.
Second, discussions with political leaders of a specific area should have been held. Political representation would have given a voice to marginalised communities.
Third, it’s better to strengthen the municipal corporation and let them implement projects instead of opting for privatisation. The government already has a decentralised structure which has been functioning pretty all right for the last many years. We should strengthen them instead of creating parallel structures. That would have been much more beneficial.
This article was originally published in News Click and can be read here.
Read and download the “7 Years of Smart Cities Mission, India – A Review” report here.
Centre for Financial Accountability is now on Telegram. Click here to join our Telegram channel and stay tuned to the latest updates and insights on the economy and finance.